research paper about hotel industry

Impact of Digitalization on Hotel Industry Development

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Part of the book series: Smart Innovation, Systems and Technologies ((SIST,volume 227))

This article considers the pressing issues associated with the impact of digitalization on the hotel industry development. The main focus is on the development factors and prospects of digital economics, as well as the fact that the hospitality industry is among the leaders in digital innovation and technology integration and use rate. The study of international experience and practices allowed the authors to identify the trends in the introduction of digital technologies into the hotel business and the changes in the hoteliers’ mindset about the lack of their use options. The authors outline in detail the prospects and the functional features of the groundbreaking innovations that can be used by hotels in order to improve their business efficiency. The paper analyzes the impact of digitalization on the hotel industry development through the examples of mobile, cloud, and virtual data security technologies. Further, the authors discover that the increased client requirements for mobility and comfort force hotels try out and use brand-new technologies in their everyday operations. The authors present a list of the most promising and relevant digital innovations along with the horizons they open. The results obtained made the authors draw the conclusion that digital technologies provide hotels with the possibility to improve their customer loyalty, reduce costs, especially for facilities and electricity, improve their business processes, operational efficiency, management and maintain the security of their business and clients in cyberspace.

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DOI : https://doi.org/10.1007/978-981-16-0953-4_57

Published : 07 June 2021

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Comprehending customer satisfaction with hotels: Data analysis of consumer-generated reviews

International Journal of Contemporary Hospitality Management

ISSN : 0959-6119

Article publication date: 14 April 2020

Issue publication date: 23 May 2020

Building on the three-factor theory, this study aims to unravel how the role of hotel attributes such as basic, excitement and performance factors could differ in accordance with different hotel star ratings and distinct customer segments.

Design/methodology/approach

This study explores the asymmetric effects of hotel attributes on customer satisfaction by extracting 412,784 consumer-generated reviews from TripAdvisor across different cities in China.

By taking into account the origins of customers and hotel star ratings, the study uncovers that guests’ expectations of hotel performance differ with respect to their origins (domestic and international guests) and the star ratings of the hotels being reviewed, thereby moderating the asymmetric impact of hotel attributes on customer satisfaction.

Research limitations/implications

The study compares and contrasts the determinants of customer satisfaction for domestic and international guests in the context of Chinese hotels. Care should still be exercised when generalizing the insights gleaned from this study to other contexts.

Practical implications

The findings from this study translate into actionable guidelines for hotel operators to make informed decisions regarding service improvement.

Originality/value

The study extends previous work by offering a deeper understanding of the asymmetric impact of hotel attributes on customer satisfaction. Specifically, this study provides a deep understanding of the different hotel attributes such as basic, performance and excitement factors in explaining customer satisfaction among different hotel customer segments. Findings from this study can not only inform hotel operators on the significance of various hotel attributes in determining customer satisfaction but also guide the formulation of business strategies to retain customers by inducing delight and not frustration.

• Customer satisfaction
• Three-factor theory
• Hotel management
• Consumer-generated review

Li, H. , Liu, Y. , Tan, C.-W. and Hu, F. (2020), "Comprehending customer satisfaction with hotels: Data analysis of consumer-generated reviews", International Journal of Contemporary Hospitality Management , Vol. 32 No. 5, pp. 1713-1735. https://doi.org/10.1108/IJCHM-06-2019-0581

Emerald Publishing Limited

Copyright © 2020, Hongxiu Li, Yong Liu, Chee-Wee Tan and Feng Hu.

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

It is natural for hotel operators to invest a tremendous amount of resources in satisfying their customers. As customer satisfaction constitutes a critical barometer for assessing hotel performance, an in-depth appreciation of the factors contributing to both satisfied and dissatisfied customers is paramount to hotel management. On one hand, very satisfied (or delighted ) customers are more likely to return and recommend a hotel. Delighted customers exhibit behavioral patterns that are distinct from moderately satisfied customers. On the other hand, very dissatisfied (or frustrated ) customers are likely to spread negative word of mouth that not only tarnishes the image and reputation of the targeted hotel but also decreases hotel revenue by deterring potential customers. Indeed, it has been documented that one negative review from an unhappy customer can translate into the subsequent loss of 30 customers ( Olsen, 2010 ).

The above phenomena highlight the urgency for modern hospitality industries to strive for customer delight while averting customer frustration. Yet, it should not come as a surprise that hotel operators have to pursue separate business strategies to attain the two business objectives. Past studies have demonstrated that the determinants of customer delight are distinguishable from those that cause customer frustration ( Albayrak and Caber, 2013 ; Alegre and Garau, 2011 ; Füller and Matzler, 2008 ). For instance, while hotel guests may be indifferent to having a clean towel, they are likely to be irritated by the presence of a dirty towel. Conversely, an offering of welcome chocolate in the room may delight customers, even though customers are unlikely to be unhappy in the absence of such services. Conceivably, hotel attributes could exert asymmetric impact on customer satisfaction: whereas customers can be highly satisfied with a hotel attribute, they can be equally dissatisfied with another hotel attribute ( Albayrak and Caber, 2015 ). In other words, the relationships between hotel attributes and customer satisfaction could be asymmetric. Specifically, one unit of positive performance of a hotel attribute could have a much greater impact on customer satisfaction than a corresponding unit of negative performance, and similarly negative performance of a hotel attribute could outweigh the effect of its positive performance on customer satisfaction.

The three-factor theory holds that product/service attributes exert asymmetric effects on overall customer satisfaction. According to the three-factor theory ( Kano et al ., 1984 ), hotel attributes can be categorized into basic , performance and excitement factors, where basic and excitement factors denote dissatisfiers and satisfiers, respectively, and performance factors induce satisfaction and dissatisfaction in a linear and symmetric fashion.

basic factors, the absence of which culminates in dissatisfaction;

excitement factors, the presence of which leads to satisfaction; and

performance factors, which exert a symmetric and linear influence on satisfaction.

Furthermore, even though domestic guests, as compared to their international counterparts, may develop different expectations on the performance of hotels with different star ratings, little is known as to whether hotel star rating moderates the asymmetric effects of hotel attributes on customer satisfaction among different customer segments, such as domestic and international guests.

To bridge the abovementioned knowledge gaps, we draw on the three-factor theory to unravel the determinants of customer satisfaction and dissatisfaction via data analysis based on a large amount of online hotel reviews. Having been applied in past studies to uncover determinants of customer satisfaction and dissatisfaction across diverse contexts, the three-factor theory offers a solid theoretical framework for comprehending customer satisfaction and dissatisfaction by taking into account the asymmetric impact of hotel attributes on customers’ assessment of hotel performance ( Albayrak and Caber, 2015 ; Füller and Matzler, 2008 ; Matzler and Renzl, 2007 ; Mikulic and Prebezac, 2012 ). Building on the three-factor theory, this study aims to unravel how the role of hotel attributes as basic, excitement and performance factors could differ in accordance with different hotel star ratings and distinct customer segments. Because star rating captures the ranking of hotels based on quality dimensions in the likes of price, facilities and level of service ( Cser and Ohuchi, 2008 ), it is conceivable that customers would expect more from a hotel with high star rating than one with low star rating. Furthermore, we argue that domestic customers may expect different levels of performance in comparison to the international counterparts. By exploring the moderating influence of hotel star ratings and customer segments (domestic and international guests) on satisfaction and dissatisfaction, we endeavor to generate novel insights into the application of the three-factor theory in the context of hospitality industry. To this end, we not only turn to the three-factor theory to unravel determinants of customer satisfaction based on online hotel reviews but also examine whether these determinants vary for domestic versus international guests and for hotels with different star ratings.

To accomplish our research objectives, we extracted a sizeable amount of customer reviews from TripAdvisor to validate the three-factor theory through varying customer segments and hotel star ratings. Our study extends previous work by offering a deeper understanding of the asymmetric impact of hotel attributes on customer satisfaction. Findings from this study can not only inform hotel operators on the significance of various hotel attributes in determining customer satisfaction but also guide the formulation of business strategies to retain customers by inducing delight and not frustration.

The remainder of the paper is structured as follows. In Section 2, we review extant literature on the asymmetric effects of factors governing customer satisfaction and on customer satisfaction in the hospitality sector. Section 3 describes our methodology before presenting the results from our data analysis. Section 4 concludes with a discussion on the implications of our empirical findings for both theory and practice.

2. Theoretical foundation

Customer satisfaction/dissatisfaction is a dominant research stream within extant literature and has attracted scholarly attention across multiple disciplines. Although there is no general consensus on the definition for customer satisfaction and dissatisfaction, but consistent with the expectation disconfirmation theory ( Oliver , 1977, 1980 ), we conceive customer satisfaction as originating from the comparison between a priori expectations and a posteriori perceived performance of a product or service ( Oliver, 1977 , 1980 ). If perceived performance is greater than expectations, positive disconfirmation and satisfaction will manifest. In contrast, the lower-than-expected performance of a product or service will culminate in negative disconfirmation and dissatisfaction. Confirmation or positive disconfirmation thus culminates in satisfaction, whereas negative disconfirmation leads to dissatisfaction. In this sense, both satisfaction and dissatisfaction can be characterized by the direction and degree of disparity between customer expectations and perceived performance of a product or service ( Anderson, 1973 ). Such conceptions also resonate with past studies that deem satisfaction and dissatisfaction to be two sides of the same coin; satisfaction can be regarded as the opposite of dissatisfaction and vice versa ( Herzberg, 1959 ; Ou and Sia, 2010 ). In other words, we adhere to Herzberg’s (1959) theorization of dissatisfaction as that of low satisfaction.

Yet, prior research has alleged to the asymmetric impacts of customer satisfaction and dissatisfaction on consumer behavior, despite their being two ends of a spectrum. As contended by Chen et al. (2014) , it is imperative to consider both satisfaction and dissatisfaction when investigating consumer behavior (e.g. loyalty) because dissatisfaction is qualitatively distinct from satisfaction. Likewise, Ou and Sia (2010) have advocated for the simultaneous inclusion of both satisfaction and dissatisfaction when researching online consumer behavior because of the latter’s complexity. In line with the prospect theory (PT) ( Kahneman and Tversky, 1979 ), dissatisfaction might exert a stronger negative impact on consumer behavior than that of degraded satisfaction. Insofar as dissatisfaction is distinguishable from satisfaction in driving consumer behavior, ignoring its existence might positively skew the findings of empirical studies.

Beyond the behavioral consequences of customer satisfaction and dissatisfaction, past studies have stated that customer satisfaction is determined by different factors associated with service quality ( Oh, 1999 ; Parasuraman et al. , 1988 ), and some scholars have also attested to asymmetric relationships between customer satisfaction and its determinants by classifying these determinants into discrete categories based on their asymmetric effects on customer satisfaction ( Matzler et al. , 2004 ). Among these studies, a dominant theory being applied is the three-factor theory of customer satisfaction ( Füller and Matzler, 2008 ; Matzler and Renzl, 2007 ).

2.1 Three-factor theory

The three-factor theory can be construed as an extension of two-factor theory of job satisfaction developed by Herzberg et al. (1959) and Matzler and Renzl (2007) . The two-factor theory presumes that a set of factors (motivators) produce job satisfaction in the workplace, whereas a separate set of factors (hygiene factors) bring about dissatisfaction. This model of job satisfaction was subsequently adapted to investigate customer satisfaction ( Maddox, 1981 ; Zhang and Von Dran, 2000 ), thereafter drawing attention to the asymmetric effects imposed by determinants of customer satisfaction. Indeed, PT has lent additional support to the existence of asymmetric relationships between customer satisfaction and its determinants ( Kahneman and Tversky, 1979 ). According to PT, customers are loss-averse; they are more sensitive to and give greater weight to losses than gains ( Kahneman and Tversky, 1979 ). Consequently, a negative performance on an attribute may exert a stronger influence on overall satisfaction than a positive performance on the same attribute ( Mittal et al. , 1998 ). For instance, a hotel customer may not be delighted by the availability of a wake-up service but may feel dissatisfied if the service is unavailable.

Basic factors : Basic factors (dissatisfiers) engender dissatisfaction when absent, but do not lead to satisfaction when present. Customers consider basic factors as the minimum requirements, prerequisites or qualifiers of a service. Meeting customer expectations on basic factors avoids dissatisfaction. Therefore, a low rating on basic factors has a stronger influence on satisfaction than a high rating, implying an asymmetric relationship.

Excitement factors : Excitement factors (satisfiers) delight customers by inducing customer satisfaction when present, but do not provoke dissatisfaction when absent. Thus, a high rating on excitement factors has a stronger effect on customer satisfaction than a low rating.

Performance factors : Performance factors (hybrids) have a symmetric and linear influence on customer satisfaction. Specifically, a high performance on performance factors leads to satisfaction whereas a low performance brings about dissatisfaction.

Within extant literature, there is an abundance of evidence alluding to asymmetric relationships between product/service attributes and customer satisfaction, such as in the context of hotel services ( Albayrak, 2019 ; Davras and Caber, 2019 ; Oh, 2003 ), sun and sand destinations ( Alegre and Garau, 2011 ), ski resorts ( Füller and Matzler, 2008 ), daily tour service ( Albayrak, 2018 ) and automotive industry ( Matzler et al. , 2004 ). In the same vein, a handful of studies have used the three-factor theory to investigate customer satisfaction within hospitality industry. Applying the three-factor theory to comprehend customer satisfaction with travel destinations, Albayrak and Caber (2013) discovered information availability to be a basic factor; health and hygiene, accommodation and shopping to be performance factors; and local transportation to be an excitement factor. In a separate study conducted on the hospitality sector, Albayrak and Caber (2015) revealed that animation, child amenities, cleanliness, food and beverage, personnel, pool and room decoration constitute basic factors, whereas beach access in conjunction with the technical capabilities of hotel rooms are performance factors. Similarly, Matzler et al. (2006) reported that reception, friendliness and service and hotel room are basic factors; wellness area is a performance factor; and hotel restaurant and breakfast are excitement factors. Lai and Hitchcock (2016 , 2017 ) have asserted that the categorization of hotel attributes into basic, excitement and performance factors is dependent on hotel characteristics (e.g. boutique, resort and luxury hotels) and customers’ previous accommodation experience (e.g. new, repeat and frequent travelers). More recently, Albayrak (2019) found that hotel staff, food and beverage quality, cleanliness of the hotel, outdoor swimming pool, wellness and spa services, children facilities, room technique, timely service and beach are basic factors, whereas hotel ambience is an excitement factor and design of rooms is a performance factor.

Table A1 summarizes related work that testifies to the existence of asymmetric relationships between product/service attributes and overall customer satisfaction in the hospitality sector.

The literature shows that the three-factor theory is an appropriate theory to examine the asymmetric impact of service/product attributes on overall customer satisfaction, and it has also been applied in research in different research contexts ( Albayrak and Caber, 2015 ; Alegre and Garau, 2011 ; Albayrak, 2018 ). Thus, the three-factor theory was used as the theoretical framework in this study to examine the asymmetric impact of hotel attributes on customer satisfaction.

2.2 Deciphering customer satisfaction in the hospitality sector

There are numerous studies that attest to hotel attributes as determinants of customer satisfaction. According to Parasuraman et al. (1988) , customer satisfaction is determined by the performance of different service attributes. In the literature, hotel attributes have been classified into different sub-categories to correspond to various aspects of hotel service ( Rhee and Yang, 2015a ). To date, prior research has largely derived the range and importance of hotel attributes from surveying customers about their accommodation experiences. Through surveying hotel guests, Qu et al. (2000) advanced six attribute categories covering 33 different hotel services. Choi and Chu (2001) identified seven hotel attributes of customer satisfaction based on survey data collected among international customers to Hong Kong. In their study, staff service quality, room quality and value were found to be the most influential factors delighting customers. Kim and Perdue (2013) suggested to consider the effect of cognitive (brand name, price and service and food quality), affective (entertaining and comfortable feeling) and sensory attributes (overall atmosphere and room quality) on hotel choice. In the research by Hua et al. (2009) , service quality was found to be core to the customers in budget hotel market in China.

Prior research has shown that the determinants of customer satisfaction with hotels can be identified through the analysis of online hotel reviews in comparison with a pre-designed questionnaire survey ( Jang et al. , 2018 ; Mellinas et al. , 2019 ; Padma and Ahn, 2020 ; Tian et al. , 2016 ). Li et al. (2013) investigated customer satisfaction in the Chinese hotel industry with online reviews and found that food and beverage management, transportation convenience, value for money and convenience to tourist destinations are important factors considering their importance in determining customer satisfaction; whereas bed, reception services and room size and decoration are also important factors that customers pay attention to, but they are less satisfied with these hotel attributes. Based on online reviews of 149 hotels in Chicago, Jang et al. (2018) have identified 30 most important hotel attributes via text mining, and staff have been found to be the most important attribute with a positive effect on user satisfaction at all the times, and other attributes exert consistent positive/negative effects with small change of their importance in explaining customer satisfaction. Kim et al. (2016) identified and compared satisfiers and dissatisfiers of full-service and limited-service hotels via content analysis of online hotel reviews on the hotels in New York City and found that staff and their attitude are the most critical factors.

In an attempt to consolidate extant literature on determinants of customer satisfaction in the hospitality sector, Rhee and Yang (2015b ) conducted a comprehensive review of past studies and put forth six hotel attribute categories, namely, location, cleanliness, rooms, sleep quality, service and value. Rhee and Yang (2015a ) maintained that it might be pragmatic to concentrate on a few focal hotel attributes rather than to overwhelm hotel operators with wide-ranging prescriptions on a multiplicity of attributes. For the same reason, five hotel attributes were selected to explore customers’ satisfaction with hospitality services in this study, namely, cleanliness, location, room, service and value. The choice of these five hotel attributes is grounded in both prior research on customer satisfaction and actual practice in the hospitality industry. According to Schuckert et al. (2015) , the five hotel attributes capture customers’ core considerations when assessing hospitality services. Furthermore, the five hotel attributes also conform to actual practice in that they are synonymous with key dimensions on which hospitality services are being assessed on TripAdvisor, the online review platform where we extracted our data.

Apart from hotel attributes, past studies have also alluded to the impact of culture on customer satisfaction in both offline and online environments. Indeed, prior research has revealed that cultural differences, in the form of geographical location, has a discernible impact on customer satisfaction ( Tse and Ho, 2009 ; Ngai et al. , 2007 ; Rhee and Yang, 2015b ). Prior literature have also alluded to the effect of hotel star rating on customer satisfaction ( Guo et al. , 2016 ; Jiang et al. , 2014 ; Zhou et al. , 2014 ). For instance, Guo et al. (2016) found differences of the most important dimensions of customer satisfaction pertinent to hotels with different star ratings. Thus, in this study, we take both the domestic and international origins of hotel guests and hotel star ratings into consideration in investigating customer satisfaction with hotels. Specifically, reviews written in English are set as international guests and reviews written in Chinese as domestic guests. In line with past studies ( Rhee and Yang, 2015b ; Yuksel, 2004 ), we assume that domestic and international guests have separate cultural backgrounds, which may affect their evaluation on the attributes of hotels with different star ratings.

applying the three-factor theory to disentangle the asymmetric impact of determinants of customer satisfaction within the hospitality sector via data analytics based on online hotel reviews; and

exploring the moderating influence of hotel star ratings and customer segments (domestic versus international guests) on those determinants.

3. Methodology

In this study, we embrace a positivist approach by validating the three-factor theory by analyzing online hotel reviews generated by consumers. In recent years, we have witnessed the increasing popularity of consumer-generated reviews in hospitality industry. Consumer-generated reviews have also been touted to be an indispensable data source for research into customer satisfaction because they are objective and do not succumb to sampling biases that typically accompany traditional survey questionnaires ( Schuckert et al. , 2015 ).

3.1 Sampling and data collection

Empirical data for this study was extracted from TripAdvisor. TripAdvisor is one of the largest online review sites providing travel-related services in the world. TripAdvisor provides an online rating system for hotel guests to assess the performance of hotel attributes and their overall satisfaction. TripAdvisor data has also been applied in extant research on hospitality in the literature. Following previous research, we applied TripAdvisor data in this study as TripAdvisor provides good data source for this study, such as customer reviews on hotels in different languages from customers in the world. For the purpose of this study, data containing customer reviews and descriptive details of hotels was hence extracted from TripAdvisor. A small program was developed based on hypertext preprocessor language to capture data from the site. We extracted 412,784 consumer-generated reviews from TripAdvisor, ending September 20, 2014, for hotels in five major Chinese cities: Sanya ( N = 30,307), Beijing ( N = 150,616), Guangzhou ( N = 55,600), Shanghai ( N = 127,673) and Hangzhou ( N = 48,588). For each review, hotel guests supplied a numerical rating according to their overall satisfaction and also for each of five focal hotel attributes (i.e. cleanliness, location, room, service and value). These ratings were elicited from hotel guests on the basis of a five-point Likert-type scale, ranging from 1 (terrible) to 5 (excellent). Hotel guests also specified the type of travel, including business trip ( N = 165,652), couple’s trip ( N = 26,283), family trip ( N = 16,984), leisure trip ( N = 132,527), solo trip ( N = 9,788) and missing value ( N = 61,550). We also gathered descriptive details for each hotel being reviewed, including its star rating and the city in which the hotel is located.

Among the reviews in our sample, 93.37 per cent ( N = 383,639) of them are written in either Chinese or English. Compared to the large number of reviews written in Chinese and English, reviews written in other languages are fewer than 10,000. After excluding reviews written in other languages, we divided the remaining reviews in our sample into two groups by detecting whether a review is written in Chinese ( N = 287,550) or in English ( N = 96,089).

The remaining 383,639 consumer-generated reviews in our data set cover 10,093 hotels in the five cities. As shown in Table A2 , there are more reviews for non-star and five-star hotels. About 30 per cent of reviews are for non-star hotels, which account for nearly 70 per cent of all hotels, whereas 30 per cent of reviews are for five-star hotels even though these five-star hotels only account for 3.5 per cent of all hotels. The concentration of reviews on five-star hotels might be because of the reason that customers are encouraged by the hotels to write reviews based on their accommodation experience.

The average rating of overall satisfaction with the hotels shows that customers are most satisfied with 5-star hotels, followed by 4-4.5 stars hotels, non-star hotels, 2-2.5 stars hotels, 3-3.5 stars hotels and 1-star hotels. Customers are more satisfied with non-star hotels compared to 1 to 3-3.5 stars hotels. This emphasizes the importance of taking hotel star ratings into consideration when examining the determinants of overall customer satisfaction with hotels.

Because non-star hotels have not been graded on the ranking system prevalent in the hospitality sector, which rates hotels based on their facilities, price and service levels ( Cser and Ohuchi, 2008 ), there could be huge variations among them. We thus decided to eliminate non-star hotels from our sample. Likewise, 1-star hotels were excluded from data analysis because of the small number of 1-star hotels (20 hotels) and reviews (148 reviews) in the sample. Our eventual sample consists of 175,577 Chinese reviews and 91,789 English reviews for data analysis. The sample is then spilt into four sub-samples for data analysis according to the four categories of hotel star ratings (i.e. 2-2.5, 3-3.5, 4-0.5 and 5).

3.2 Data analysis

We adopted the MySQL and the textcat package in R software to detect the language being used in consumer-generated reviews ( Hornik et al. , 2013 ), after which the statistical software of R was used for data analysis to inspect the asymmetric effects of focal hotel attributes on customer satisfaction and dissatisfaction. Regression analysis with dummy variables has been extensively applied in prior research to test asymmetric relationships across diverse contexts ( Alegre and Garau, 2011 ; Füller and Matzler, 2008 ; Matzler and Renzl, 2007 ; Oh, 2003 ). Consistent with extant literature, a set of dummy variables was generated for the current study. Specifically, a rating of 1 or 2 is coded as low performance, a rating 3 or 4 as average performance and a rating of 5 as high performance ( Alegre and Garau, 2011 ). Accordingly, the dummy variables are formulated as low performance (0, 1), high performance (1, 0) and average performance (0, 0). Fixed-effect dummy variable regression was performed to detect asymmetric effects by controlling for discrepancies in city, types of travel and year of rating. The formula for data analysis is given below: (1) Overall Rating =  β 0  +  β 1 (high cleanliness rating) +  β 2  (low cleanliness rating) +  β 3  (high value rating)  +  β 4  (low value rating) +  β 5 (high room rating) +  β 6  (low room rating) +  β 7 (high service rating) +  β 8   (low service rating) +  β 9  (high location rating) +  β 10  (low location rating) + city + (type of travel) +  year +  ε

An unstandardized coefficient was used to detect asymmetric effects in the regression based on the recommendation of Mikulic and Prebezac (2012) . Furthermore, because of the usage of a large amount of data, we subscribed to a conservative approach in defining performance factors by comparing the 95 per cent confidence interval (95 per cent CI) of each regression coefficient. The 95 per cent CI indicates “the range of values that encompass the population or ‘true’ value” with a given probability of 95 per cent ( Nakagawa and Cuthill, 2007 , p. 593). Consequently, when the values of the 95 per cent CIs of the high satisfaction level and the low satisfaction level of a hotel attribute overlap, we classify the attribute as a performance factor. Conversely, when no overlap exists between the 95 per cent CIs of the two different levels of an attribute, we regard the related coefficients as being truly detached.

3.3 Analytical results

Regression results indicate significant effects of both high and low performance levels of each hotel attribute on customers’ overall satisfaction – independent of hotel star rating ( Tables A3 and A4 ). Domestic and international guests differ somewhat with regard to the impact of satisfiers and dissatisfiers, even though a majority of hotel attributes are found to be basic factors across both domestic and international guests. With the exception of cleanliness being a performance factor for hotels with 3-3.5 stars for domestic guests, the five focal hotel attributes constitute basic factors for hotels with 3-5 stars for both domestic and international guests. For hotels with 2-2.5 stars, we uncovered location to be a performance factor, whereas cleanliness, room, service and value constitute basic factors for domestic guests. Conversely, for international guests, room and service act as performance factors whereas cleanliness and value are basic factors and location is an excitement factor.

As depicted in Figure A1 , hotel star rating moderates the asymmetric effects of hotel attributes on customers’ overall satisfaction. The ensuing research framework exhibits good explanatory power between 61.5 per cent and 67.1 per cent for domestic guests and between 73.4 per cent and 79.5 per cent for international guests.

4. Discussion and conclusions

4.1 conclusions.

Undoubtedly, guests possess expectations when staying at hotels and are eager to optimize their accommodation experience. The five focal hotel attributes, as espoused in this study, not only aid customers in assessing their accommodation experience but also help in distinguishing the relative importance of each attribute in driving customer satisfaction.

Through our empirical study, we discovered that most hotel attributes act as basic factors, the absence of which leads to customer dissatisfaction. All five focal hotel attributes constitute basic factors for hotels with 4-4.5 and 5 stars for both domestic and international guests. Findings indicate that cleanliness, location, room, service and value should be conceived as essential attributes for luxury hotels (e.g. 4-5 stars hotels) to reduce dissatisfaction among both domestic and international guests. The findings are partly consistent with the prior research work of Padma and Ahn (2020) and Zhou et al. (2014) . Based on content analysis of online hotel reviews, Padma and Ahn (2020) found that guests of luxury hotels have specific expectations related to room, cleanliness and service. Zhou et al. (2014) noted that room (such as room size), cleanliness, location (such as close to attraction and accessibility with public transportation) and value (such as room price) are dissatisfiers for customers of luxury hotels (such as 4-5 stars hotels). Such an observation can be attributed to several reasons. As 4-5 stars hotels tend to be more expensive, their guests are bound to have high expectations of the performance of the five focal hotel attributes. If the performance of the five hotel attributes of 4-5 stars hotels falls short of their expectations, both domestic and international guests will be dissatisfied. But at the same time, enhanced performance of the five hotel attributes for 4-5 stars hotels are unlikely to delight domestic and international guests because of their high expectations.

For mid-range hotels (e.g. 3-3.5 stars hotels), the five hotel attributes constitute basic factors for international guests, whereas for domestic guests, location, room, service and value are basic factors, while cleanliness is a performance factor. Our observation of cleanliness as a performance factor for domestic guests might be because of the reason that hotels with higher star ratings (e.g. 4-5 stars hotels) are more competent in maintaining cleanliness as opposed to those with lower star rating (1-3.5 stars hotels). Therefore, even though domestic guests do pay attention to the cleanliness of their accommodations, they possess more reasonable expectations for mid-range hotels such that if the cleanliness of such hotels matches their expectations, they are likely to be satisfied and vice versa.

For economic hotels (e.g. 2-2.5 stars hotels), location is a performance factor whereas cleanliness, room, service and value are basic factors for domestic guests. Conversely, for international guests, room and service are performance factors whereas cleanliness and value are basic factors and location is an excitement factor. Cost savings is paramount for both domestic and international guests who stay at economic hotels. Thus, location is a vital consideration for these customers because they could save from walking rather than taking public transportation. For domestic guests, an economic hotel situated in a good location will satisfy them, whereas a bad location will dissatisfy them. As noted by Ren et al. (2016) , location is an important factor determining Chinese customers’ satisfaction with budget hotels in China. This might be because domestic guests expect economic hotels to be situated in convenient locations. As for international guests, economic hotels situated in good locations will delight them even though a bad location will not invoke their dissatisfaction. The reason might be that international guests would not mind the bad location of an economic hotel if they have already taken it into consideration in the initial booking. Moreover, because of the lack of dining and entertainment facilities in economic hotels, improved room quality will delight international guests as they need a comfortable room for resting. Because the service quality of economic hotels in China cannot be guaranteed, our findings suggest that international guests will be satisfied if the service quality matches their expectations and dissatisfied otherwise.

Our findings underline the role of cleanliness, location, room, service and value for reducing customer dissatisfaction. For domestic customers, we found cleanliness to be a basic factor except for hotels with 3-3.5 stars hotels. This observation departs from past studies that allude to cleanliness as having the role of both basic and performance factors. While the work of Albayrak and Caber (2015) categorized cleanliness as a basic factor in determining customer satisfaction based on survey data, Ryan and Huimin (2007) regarded cleanliness as a performance factor based on the survey responses from Chinese hotel customers. Our finding on service as a basic factor aligns with the work of Albayrak and Caber (2015) and Deng et al. (2008) with probably the only distinction being that service was also found to be a performance factor for international guests staying in economic hotels. Our finding on value as a basic factor of customer satisfaction contradicts the work of Ramanathan and Ramanathan (2011) who equated value with being an excitement factor. In our study, room is a basic factor for both domestic and international guests, except for hotels with 2-2.5 stars for international customers. This is consistent with the work of Albayrak and Caber (2015) , Matzler et al. (2006) and Ramanathan and Ramanathan (2011) , who classified room as a basic factor. Interestingly, our study illuminates that location can assume the role of basic, performance and excitement factors across distinct customer segments and for hotels with different star ratings. In a way, our findings reinforce the work of Albayrak and Caber (2013) and Füller and Matzler (2008) in that the role of cleanliness, location, room and service as basic, performance and excitement factors differ for both domestic and international guests.

As for the factors that delight domestic guests, room quality appears to be most salient followed by service and value. This finding corroborates the work of Rhee and Yang (2015a) , in which they attested to room attribute as being vital to domestic guests, especially with respect to the comfort of the hotel room. Similarly, a good location has a relatively weak effect in delighting guests. But at the same time, location and value have weak impact on guests of luxury hotels with 4-5 stars. Guests of 5-star hotels are less likely to be delighted by cleanliness and service quality when compared to those staying in 2-3.5 stars hotels.

Furthermore, a low performance in room or service quality exerts a strong effect in frustrating guests that is independent of hotel star ratings. Additionally, guests of luxury hotels with 4-5 stars are more adversely affected by low-quality service than guests staying at economic and mid-range hotels with 2-3.5 stars. This impact is especially pronounced for domestic guests staying in 5-star hotels than for those staying in hotels with 4-4.5 stars. For domestic guests staying in 2-2.5 stars hotels, the quality of the room appears to be a stronger dissatisfier than service. Table A3 shows the opposite to hold true. The findings indicate that improving room quality is the most effective way in preventing dissatisfaction among domestic guests staying in 2-2.5 stars hotels. This is followed by the second most critical attribute of service. Improving service quality is crucial for 4-5 stars hotels. Failing to deliver room and service quality negatively influences the experience of domestic customers.

Our results revealed hotel service to be the most prominent factor delighting international guests followed by room and value. This finding is consistent with prior research of Liu et al. (2017) . They compared customer satisfaction with hotels by studying online hotel reviews and found that international hotel guests place greater emphasis on hotel services related to room quality, while the opposite holds true for domestic guests ( Liu et al. , 2017 ). For hotels with 2-5 stars, there is an increase in the effect of low-quality service on the dissatisfaction of international guests. Room and service quality constitute performance factors for 2-2.5 stars hotels, pointing to a linear impact of these two hotel attributes on customer satisfaction. Our findings further show that for international customers, economic hotels with bad locations and room quality will lead to dissatisfaction whereas a good location and room quality will delight them. Finally, the poor value of a hotel room often induces dissatisfaction among international guests more than that of a low-quality room.

Magnini et al. (2011) noted that customer satisfaction can be influenced by the origins of the customers or the nature of travel, such as domestic or international hotel guests. Ryan and Huimin (2007) have also stated that customer satisfaction with hotels is affected by hotel star rating. Our findings on the basic, performance and excitement factors for customer satisfaction among domestic and international hotel guests provide further evidence on the impacts of hotel star ratings and cultural origins of customers (such as domestic and international guests) on customer satisfaction with hotels.

4.2 Implications for theory

This study contributes to extant literature on four fronts. First, our empirical findings suggest that guests either possess a priori expectations or impose prerequisites on the performance of the five focal hotel attributes and that a majority of these attributes constitute basic factors in driving customer satisfaction. But at the same time, there are a couple of hotel attributes that function as performance or excitement factors for economic and mid-range hotels for certain customer segments. Adhering to the three-factor theory, findings in this study illustrate that the drivers of customer satisfaction – basic, performance and excitement factors – differ across customer segments for hotels with differentiated star ratings. In this sense, this study lends credence to the three-factor theory as a solid theoretical framework for elucidating the asymmetric impacts of product/service attributes on overall customer satisfaction. In addition, we also extend the three-factor theory by demonstrating that basic, performance and excitement factors do not stay invariant and can change their roles depending on customer segments and hotel star ratings. That is, an excitement factor (e.g. location) for an international guest staying in an economic hotel can be a performance factor for domestic guests staying in the same hotel or a basic factor for guests staying in luxury hotels.

Second, this study is among the first to test the three-factor theory in explaining customer satisfaction based on a large amount of online hotel reviews. It is expected that our usage of the large amounts of online hotel review data in data analytics can offer greater precision in pinpointing the asymmetric effects of hotel attributes on customer satisfaction with a high degree of external validity. By quantifying the asymmetric impact of cleanliness, location, room, service and value on customer satisfaction, we obtained insightful findings. In contrast to the work of Albayrak and Caber (2015) , who categorized the five hotel attributes as basic factors, we discovered that this only holds true for mid-range and luxury hotels. For economic hotels, certain hotel attributes could become performance (e.g. location, room, and service) or excitement factors (e.g. location) for distinct customer segments (e.g. domestic versus international guests). Through harnessing the large amount of online hotel review data, our findings enrich extant literature on customer satisfaction by building on the three-factor theory to take into consideration determinants of customer satisfaction that vary across customer segments and hotel star ratings.

Third, by delineating between domestic and international guests, we realized that hotel guests value the performance of hotel attributes differently. Domestic guests tend to emphasize room over service quality, whereas international guests treasure the opposite. Variations between domestic and international guests thus highlight the necessity of differentiating them in future studies to yield a more holistic picture of customer satisfaction.

Finally, by analyzing customer ratings alongside hotel star ratings, we witnessed that the effects of high versus low performance of hotel attributes differ across hotels with different star ratings. Findings point to the importance of taking hotel star ratings into account in future research to avoid biasing the results.

4.3 Implications for practice

Findings from this study translate into actionable guidelines for hotel operators to make informed decisions regarding service improvement. As revealed in this study, hotel guests, in general, possess a priori expectations of the performance of focal hotel attributes. If the performance of these hotel attributes does not match customers’ expectations relative to the star rating of a targeted hotel, dissatisfaction will result. Given the stronger impact of low-performance in comparison to high-performance, we argue that hotel guests can only be delighted when the performance of focal hotel attributes meets the basic expectations of the guests. In other words, satisfying customers’ basic expectations is a necessary but insufficient condition for achieving customer satisfaction. Consequently, hotel operators should fulfill the basic requirements for hotel attributes to meet the basic expectations of customers and reduce their dissatisfaction. Furthermore, hotels should be competitive on the performance factors of hotel attributes to increase customer satisfaction and excel on the excitement factors of hotel attributes so as to delight customers. Hotel operators should be cautious when making decisions on delighting customers, as an excitement factor might become a basic factor when customers get acclimatized to being delighted and that positive experiences, which were once a surprise, become mundane ( Rust and Oliver, 2000 ). In other words, improvements in hotel management and investments in hotel facilities may raise guests’ expectation of hotel performance such that excitement factors might be downgraded to be basic factors of customer satisfaction.

Furthermore, hotel operators should draw on different attributes when serving domestic versus international guests, as customer satisfaction on a given hotel is influenced by the origins of customers (such as domestic and international customer). For domestic guests, room quality, followed by service quality and value are the key motivators. For international guests, service quality is the most influential motivator followed by room and value. The major factors for dissatisfiers are room and service quality as well as value for domestic guests. As for international guests, cleanliness as well as room, service and value are principal dissatisfiers. In other words, it is imperative to offer high-quality service to both domestic and international guests even though international guests value service quality much more than domestic guests. Nevertheless, in terms of basic requirements, international guests have higher expectations of cleanliness but place less emphasis on room quality, whereas domestic guests possess greater anticipation of room quality with less emphasis on cleanliness. Taken together, these findings yield invaluable insights for hotel operators that target niche market segments. For instance, investments in room renovation are necessary to reduce the dissatisfaction of domestic guests whereas maintaining high standards of cleanliness reduces the dissatisfaction of international guests. Hotel operators should hence pursue separate strategies to enhance satisfaction and reduce dissatisfaction across customer segments.

Last but not least, operators of hotels with different star ratings should tailor their business strategies to fulfill the varying expectations of customers. For instance, 5-star hotels face higher expectations of service quality even though their guests have lower expectations of value and are therefore, less sensitive to price. International guests are less affected by location and room quality when lodging at 3-star hotels as compared to their 5-star counterparts. Nonetheless, operators should foresee a steep increase in expectations of service quality from 3- to 5-star hotels for both domestic and international guests. For operators of economic hotels (e.g. 2-2.5 stars hotels), location is everything, as it can induce satisfaction for both domestic and international guests while minimizing the dissatisfaction of domestic guests.

4.4 Limitations and future research

This study has several limitations. First, we compare and contrast the determinants of customer satisfaction for domestic and international guests in the context of Chinese hotels. Though we are confident of the validity of our analytical results, care should still be exercised when generalizing the insights gleaned from this study to other contexts. Second, the study only touches on five focal hotel attributes. For this reason, we cannot claim that the five hotel attributes are exhaustive. Future research can reflect on other hotel attributes for which asymmetric effects could exist. Third, in this study, we only scrutinize how the roles of basic, performance and excitement factors differ between domestic and international guests staying in hotels with different star ratings, thereby leaving guest groups from a specific country unexplored. In addition, this study uses overall hotel rating as a proxy for customer satisfaction. It is hence necessary to investigate variations among customer segments having the most common languages on social network sites associated with travel and tourism services (e.g. French, German, Japanese, Russian and Spanish) as well as with the actual review texts via applying other data analysis methods like sentiment analysis. Fourth, Rust and Oliver (2000) stated that customers may become accustomed to being positively surprised and will begin to treat excitement factors that once delight them as normal occurrences. Likewise, Füller and Matzler (2008) called for further research into how long an excitement factor could continue to delight hotel guests. A longitudinal study should thus be conducted to investigate the temporal impact of basic, performance and excitement factors on customer satisfaction. Fifth, this study only applied the data from TripAdvisor until 2014. Future study can consider using recent data and data from different platforms to investigate the impact of hotel attributes on customer satisfaction. Finally, this study does not differentiate between hotel guests according to their demographic characteristics (e.g. gender, age and education). This may serve as an avenue for future research to determine whether moderating influences exist based on the demographic composition of hotel guests.

Visualizing the moderating influence of hotel star rating on asymmetric effects of hotel attributes on customer satisfaction

Review of extant literature on asymmetric relationships between product/service attributes and overall customer satisfaction

Number of hotels with Chinese and English reviews

Table AIII.

Results of fixed effect dummy variable regression for domestic guests while controlling for discrepancies in city, types of travel and year of rating

*** p < 0.001; n.s.: not significant

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Corresponding author

About the authors.

Hongxiu Li is an Assistant Professor at the Department of Information and Knowledge Management, Tampere University, Finland. She received a D Sc (Econ and BA) in Information Systems Science from Turku School of Economics, University of Turku, Finland. Her expertise and research interests cover the areas of information systems use behavior, digital services, social media and big data. Her research has been published in journals such as Information Systems Journal , European Journal of Information Systems , Computers in Human Behavior , Computer and Education , Decision Support Systems , Tourism Management , Information and Management and PLOS ONE .

Yong Liu is an Assistant Professor of Information Systems at Aalto University School of Business, Finland. He holds a PhD in Business Administration and Economics from Åbo Akademi University, Finland. His research interests cover the areas of big data, electronic commerce, mobile commerce, social media and electronic Word of Mouth. His work has been published in journals, such as ACM Transactions on Computer-Human Interaction , Decision Support Systems (DSS), Information Systems Journal , Information and Management (I&M), Journal of Advertising Research , Government Information Quarterly (GIQ) and European Journal of Information Systems (EJIS) . His research that applied business analytic methods has been published in journals such as Tourism Management (TM) and PLOS ONE . Yong currently serves as an Associate Editor for Internet Research ( IntR ).

Chee-Wee Tan is a Professor at the Department of Digitalization in Copenhagen Business School (CBS), an Honorary Professor of Business Analytics and Digitalization at the Nottingham University Business School China in the University of Nottingham Ningbo China, an International Visiting Professor at the School of Management in the University of Science and Technology of China, a Senior Research Fellow at the Weizenbaum Institute for the Networked Society and a Visiting Professorial Fellow at the School of Information Systems and Technology Management in University of New South Wales. He received his PhD in Management Information Systems from the University of British Columbia. His research interests focus on design and innovation issues related to digital services. His work has been published in leading peer-reviewed journals such as MIS Quarterly ( MISQ ), Information Systems Research , Journal of Management Information Systems (JMIS), Journal of the American Society for Information Science and Technology , EJIS and DSS. Apart from his current appointment as a Senior Editor for MISQ , Chee-Wee is currently serving on the editorial boards for Industrial Management and Data Systems , IEEE Transactions on Engineering Management , I&M, IntR , Journal for the Association of Information Systems , Journal of Computer Information Systems and Journal of Management Analytics . In addition, Chee-Wee has served in various editorial capacities for special issues at Decision Support Systems (DSS), I&M and JMIS . Finally, he is the Co-director of the joint research center between CBS and the Antai College of Economics and Management in Shanghai Jiao Tong University.

Feng Hu is an Associate Professor at Xingzhi College at Zhejiang Normal University, China. His research interests cover the areas of text mining, big data social science, electronic commerce and consumer behavior. He has more than 50 publications at international conferences and journals, such as TM , International Journal of Hospitality Management , Journal of Systems and Information Technology, GIQ and Cyberpsychology, Behavior, and Social Networking .

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Who cares about single childless employees in the hotel industry? Creating a workplace culture beyond family-friendly

Assessing customer financial risk perception and attitude in the hotel industry: exploring the role of protective measures against covid-19, too generous to be fair experiments on the interplay of what, when, and how in data breach recovery of the hotel industry, an exploration of female underrepresentation on executive boards in the dutch hotel industry through an ethical lens.

PurposeThis paper elucidates female underrepresentation on executive boards in the Dutch hotel industry through a “feminist” stakeholder perspective, which persists despite public opinion and government initiatives to resolve this enigma. It contributes to this discussion by examining Rhenish governance structures through a “feminist” stakeholder-focused rationale, complementing prevailing Anglo-Saxon shareholder-focused governance research.Design/methodology/approachEleven in-depth, semi-structured interviews were conducted with hotel executive board representatives and five with sublevel management representatives. Saturation was achieved by interviewing all females on Dutch hotel corporate boards regarding their career experiences compared with those of female general managers and male counterparts.FindingsThis paper finds a prevailing “masculinist” perspective of an idealized shareholder-orientated executive and a “feminist” perspective of a humanized stakeholder-orientated executive expressed within the interviews. While the former sacrifices family for their career, the latter balances their family with their career. The former fosters presupposed gender norms, with females commonly sacrificing their careers while males sacrifice their families. Notably, most executives predominantly supported the humanized stakeholder-orientated executive, while recognizing that micro-, meso- and macro-structural barriers remain.Originality/valueThis paper addresses a lacuna in the ethical literature in exploring female executive representation in Rhenish stakeholder-focused governance structures, as opposed to Anglo-Saxon shareholder-focused ones. It found a “masculinist” perspective of an idealized shareholder-focused executive archetype and a “feminist” perspective of a humanized stakeholder-focused executive archetype. Notably, contrary to perceived business norms, several interviewees rejected the former as it is incompatible with family and work, instead seeking the latter which balances between family and work.

Applications of Robot Staff in Hotels

Service robots are being increasingly employed as hotel staff in the hotel industry. This study explored how hotels can better use and implement service robots for their operation. Four hotels using robots as their staff are chosen as examples for investigating what positions the robot staff do and the comments from customers. It was found that the acceptance of robots in delivering transfer services (eg. Carrying luggage, delivering room service, etc.) are higher than when they provide services at the front desk. These results demonstrated that customers have expectations in engaging with heartwarming interaction with staff when they stay in the hotel, which the robot staff are not providing such interaction in current technology. Therefore, it is suggested that the hotels can arrange the robot staff with the position that do not interact with customers in the current stage. The robot staff can assist the human staff in providing service until they can develop a sophisticated system in two-way interaction.

The Impact of Hotel Customer Experience on Customer Satisfaction through Online Reviews

With the growing popularity of the internet, customers can easily share their experiences and information in online reviews. Consumers recognize online reviews as a useful source of information prior to consumption, and many online reviews influence consumer purchasing decisions. Understanding the customer experience in online reviews is thus necessary to maintain customer satisfaction and repurchase intention for the sustainable development of the hotel business. This study assessed the fundamental selection attributes of customers from online reviews reflecting the hotel customer experience, and investigated their association with customer satisfaction. A total of 8229 reviews were collected from Google travel websites from December 2019 to July 2021. Text mining and semantic network analysis were adopted for big data analysis. Factor and regression analyses were then used for quantitative analysis. Based on linear regression analysis, the Service and Dining factors significantly affected customer satisfaction. Service is a critical selection attribute for customers, and the provision of more particular services is necessary, especially after COVID-19. These results indicate that understanding online reviews can provide theoretical and practical implications for developing sustainable strategies for the hotel industry.

Supplier selection criteria in the Greek hotel food and beverage divisions

PurposeThe purpose of this study is to investigate the factors affecting supplier selection in food and beverage divisions in the Greek hotel industry. This research aimed to (1) examine the factors affecting supplier selection in food and beverage divisions of the Greek hotel industry, as these were perceived by the Greek purchasing managers themselves; (2) investigate the underlying factors when changing a supplier.Design/methodology/approachA survey was conducted using a closed-ended type questionnaire. Data collection met the following three criteria: hotels with a fully operational food and beverage division could participate in the research, the research population comprised all the hotels located in 13 regions of Greece, the sample represented over 10% of the total hotels in each region. Finally, 653 valid questionnaires were collected.FindingsExploratory factor analysis showed that six broad sets of factors affect supplier selection in the food and beverage divisions: those related to raw materials, financing, environment, services, origin-nutrients and people. Regarding the factors considered in changing a supplier, three factors were found: service and product quality, economic policy change, food quality and safety management systems.Research limitations/implicationsGreek hotel managers could use the findings of the study to effectively create a supply chain management strategy that will lead to improved firm performance. Understanding the importance of the selection criteria for the supply chain performance and the need to build strong relationships with stakeholders, suppliers could also create a proper supply chain.Originality/valueThe study adds to the knowledge regarding the perspectives of the Greek purchasing managers in food and beverage divisions in hotel industry and the body of much-needed research. Using exploratory factor analysis, a sort of grouping of the variables seems beneficial for simplifying how to present and understand the factors affecting supplier selection in food and beverage divisions within the Greek context.

Resilience of the Hotel Industry in COVID-19

COVID-19 has resulted in restrictions on travelling and public get-togethers. Amid the pandemic, one of the industries to be the most severely affected is the hotel industry. In the post-covid period, the industry is struggling for its subsistence due to mounting debts, change in behavior and perception of consumers, and lack of cash flows. This has resulted in loss of employment and has also negatively impacted allied industries. However, hotel entrepreneurs have shown resilience amid the crisis and have begun to explore novel opportunities. Hotels have adopted innovative technological and digital ways to satisfy the needs of the consumers for a contactless experience. The objective of this chapter is to explore the responses of the Indian hotel industry to the pandemic and risks associated with it. It explores the new paradigm and challenges for the industry and explains the resultant new trends in the hotel industry. The emphasis is on the exploration of long-term recovery and resilience of the hotel industry in India along with the policy measures and implications for the hotel industry.

Historical Turning Points in Tourism: The Establishment of the Hotel Board in South Africa

The concept of “turning points” is increasingly applied to understand the evolution of tourism. Using archival research, it is demonstrated that a significant turning point for the evolution of tourism in South Africa occurred in 1964–1965 with the establishment of the Hotel Board and the beginnings of its operations. From 1928 government legislation produced a hotel industry in which most “hotels” were oriented more to liquor selling than the supply of accommodation services. This trajectory of the hotel industry continued into the 1960s. Arguably, the initiation of the Hotel Board was a turning point in the growth and modernization of the hotel sector and for the tourism industry in South Africa. Undertaken at a period of expansion in the domestic and international tourism industry as well as of rising government awareness as to the potential economic (and political) benefits from expanded tourism promotion the activities of the Hotel Board addressed the long standing shortcomings surrounding the quality and standards of provision of accommodation services in South African hotels. It represented a transition in the character of the tourist hotel in South Africa from one that was formerly dominated by liquor to an institution that—going forward—would be mainly concentrated on the provision of hospitality services.

Travellers' Intentions to Use Facial Recognition Systems for Authentication in Hotels

With the rapid development of this technology, facial recognition systems have become widely adopted in recent years. The application of the facial recognition systems by the hotel industry has resulted in a novel service model, as well as in high expectations. These systems can be used to improve conventional services and can also enhance hotel security. Based on theory, this paper employs a technology acceptance model to gain a deeper understanding of how travelers' intention to use facial recognition systems for authentication is formed. This paper employed the survey method and used data from 413 subjects to develop a model yielding results with both theoretical and management implications. These results highlight the advantages and potential commercial value of facial recognition systems, and can provide useful analysis and suggestions for the hotel industry.

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Hotel acquisitions demystified: Essential industry insights

Eric Rubino

The importance of location and micro-location

Every real estate professional knows the value of location, but in the hotel industry, it’s not just about city or region. The micro-location, such as proximity to tourist attractions, business districts, or transportation hubs, can drastically influence occupancy rates and revenue potential. In a research study on hotel values within the Chicago Metropolitan Statistical Area conducted by Maxence Valentin and John W. O’Neil, the study’s authors state that hoteliers and hotel investors should be aware of the significant difference in value carried by properties located relatively closer to the city center. On average, the study found that an incremental mile away from the city center decreases hotel market value by 13.0% for the first 10 miles. This effect should be taken into account by professionals when valuing hotel properties10.

Comprehensive RevPAR analysis

Revenue per Available Room (RevPAR) is a critical metric in the hotel sector. A holistic analysis of RevPAR, accounting for seasonal variations and compared against competitors in the same segment, offers insights into a property’s revenue-generating capability. PWC expects 2024 RevPAR to increase by 2.7% over 2023, which equates to approximately a 117% increase over pre-pandemic levels, with almost all of the increase coming from an increase in Average Daily Rate (ADR), which has the biggest impact on hotel profitbailty3. Analyzing RevPAR regularly and against competitors provides invaluable revenue potential insights.

Delving into the STR Report

The STR report, a mainstay in the hotel industry, provides benchmarking data regarding occupancy, average daily rates, and RevPAR. STR data reveals that in 2019, U.S. hotels had an average occupancy rate of around 66% and ending 2023 near 63%1&2, almost reaching pre-pandemic levels. Utilizing this data helps potential buyers understand their position in the market landscape.

Brand affiliation and its implications

A hotel’s brand affiliation can significantly impact its valuation. From international luxury chains to boutique brands, understanding the advantages, constraints, and royalty structures associated with each is crucial. While over the past several years independent and soft branded hotels have grown RevPAR at levels higher than franchised and affiliated hotels, a study conducted out of the Pennsylvania State University and Orebro University by John W. O’Neil and Mats Carlback, respectively, shows that franchised and affiliated hotels were able to flow more profit to the Net Operating Income line than the independent and soft branded hotels in their study, highlighting that franchised hotels, despite brand fees, are able to retain their RevPAR resulting in higher profit margins4&5. Grasping the nuances of affiliations – benefits, limitations, and royalties – is thus essential.

Capital expenditure (CapEx) projections

Hotels, unlike other real estate assets, require continuous investments to remain competitive. A clear understanding of future CapEx needs, from room renovations to technology upgrades, is essential for accurate financial forecasting. A CapEx study from the International Society of Hospitality Consultants (ISHC) states that hotels spend an average of 7% of their annual revenues on CapEx, which is higher than the typical 4% FF&E reserve underwritten industry wide6. Recognizing forthcoming expenses, from refurbishments to tech enhancements, is foundational for financial projection accuracy.

Management agreements and operational contracts

Delving into existing management contracts, franchise agreements, and vendor contracts is crucial. These agreements can influence operational flexibility, financial obligations, and even the exit strategy.

Guest experience and online reputation

In the age of digital reviews, guest satisfaction scores on platforms like TripAdvisor or Booking.com can provide insights into operational quality, service standards, and potential areas of improvement, as well as have a direct impact on the hotel’s financial performance. A study with insight provided by ReviewPro showed that a 1% increase in a hotel’s online reputation score leads to an approximate 0.89% uplift in price (ADR) and a 0.54% growth in occupancy, emphasizing the link between reviews and financial success7.

Due diligence on licenses and permits

Hotels operate within a web of regulations. Ensuring that all operational licenses, from liquor to entertainment, are in place and compliant is a non-negotiable aspect of the acquisition process.

Feasibility of renovating, repositioning or rebranding

Every acquisition carries the potential for value addition. Evaluating the feasibility and financial implications of renovating, repositioning or rebranding can uncover hidden value propositions. JLL reported that effectively renovated hotels have experienced a 13.5% increase in room revenues post-renovation8.

Employee contracts and union agreements

Hotels often employ a sizable workforce, and understanding the nuances of employee contracts, union agreements, and staff benefits can have substantial implications on operational costs and flexibility. Understanding these nuances is pivotal. In 2022, the Bureau of Labor Statistics noted that unionized employees earned about 18% more than their non-union counterparts, influencing budget considerations9.

Navigating the complex world of hotel acquisitions requires not just a keen business acumen but also a deep understanding of the unique facets of the hospitality industry. By focusing on these industry-specific elements, potential buyers can ensure a strategic, informed, and value-driven acquisition process.

Acquisitions/Investment/Deal Structuring, Cayuga Hospitality Consultants

A highly experienced network of independent hospitality consultants providing a diversity of consulting services and expert guidance to the Hotel/Resort, Food & Beverage, Commercial Foodservice, Club and Spa, Casino and Tourism industries.

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